Expenditure - When an Asset? When an Expense

Expenditure is an act of disbursing cash or incurring an obligation to pay (liability) for a benefit received.

Expenditure is a complete act when there's an immediate disbursement of cash for a benefit received.

In some instances, when a company is short of cash, the expenditure is not immediately accompanied by a cash disbursement, instead, the company promises to pay the cost of benefit in some future time.

Note, that even if there's no immediate cash payment the act is still an expenditure because the benefit is received.  The subsequent payment does not result to another benefit or expenditure, just that the cash disbursement has been deferred or postponed and payment merely complements the act.

The benefit received may be a tangible or intangible form.

The benefits in tangible form are those can be seen which means those with physical or constructive forms. Examples are building, ink, pencil, truck. Notice, these benefits has color, size or form.

While, the benefits in intangible form are those which can not be seen like franchise, trademark, copyright, etc.

To determine when an expenditure is an asset or expense depends as to the length of time or when the benefit received will last.

The expenditure is classified an asset when the benefits received will last for a long period of time.

Conversely, the expenditure is classified as an expense when the benefits received last for a short time period.

Long means lasting for more than a year, in contrast to short time which is less than one year.